Abstracts – Browse Results
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Chan, C T W and Sher, W (2014) Exploring AEC education through collaborative learning. Engineering, Construction and Architectural Management, 21(05), 532-50.
Jefferies, M, Brewer, G J and Gajendran, T (2014) Using a case study approach to identify critical success factors for alliance contracting. Engineering, Construction and Architectural Management, 21(05), 465-80.
Karim, J A, Demian, P, Baldwin, A and Anumba, C (2014) An empirical study of the complexity of requirements management in construction projects. Engineering, Construction and Architectural Management, 21(05), 505-31.
Lan, O B, Ling, F Y Y and Soo, A (2014) Information feedback and bidders’ competitiveness in construction bidding. Engineering, Construction and Architectural Management, 21(05), 571-85.
Leung, M-y, Dongyu, C and Liu, A, M.M. (2014) Impact of values on the learning approaches of Chinese construction students in Hong Kong. Engineering, Construction and Architectural Management, 21(05), 481-504.
Mahdi, H S and Carmichael, D G (2014) An optimal target cost contract with a risk neutral owner. Engineering, Construction and Architectural Management, 21(05), 586-604.
- Type: Journal Article
- Keywords: construction; contracts
- ISBN/ISSN:
- URL: https://doi.org/10.1108/ECAM-01-2013-0003
- Abstract:
Purpose - Target cost contracts are commonly used to share the monetary outcome of work or a project. However, discussion is ongoing, as to what constitutes optimal sharing. The purpose of this paper is to examine optimal sharing and derives a result for defined risk assumptions on the owner (risk neutral) and contractor (risk-averse ranging to risk neutral). Design/methodology/approach - The derivation is based on solving a constrained maximization problem using ideas from principal-agent theory. Practitioners were engaged in a designed exercise in order to validate the approach and propositions. The influence of the contractor's level of risk aversion, the cost uncertainty and the contractor's effort effectiveness are examined. Findings - The paper shows that, at the optimum, the sharing ratio between contractor and owner needs to reduce and the fixed fee needs to increase when the contractor becomes more risk-averse, the level of the cost uncertainty increases, or the effectiveness of the contractor effort decreases. Practical implications - The paper's findings provide practitioners with a useful benchmark for outcome sharing in target contracts. Originality/value - Existing work on outcome sharing in target contracts is limited to being qualitative and anecdotal in nature. This paper extends existing knowledge by providing a quantitative treatment of optimal sharing.
Na, L J (2014) The government as marketer of innovation. Engineering, Construction and Architectural Management, 21(05), 551-70.